You Don’t Have to Be a Genius to Understand What a Chapter 13 Bankruptcy Is

A Chapter 13 bankruptcy is a debt consolidation plan. It allows you to restructure your debt and pay it over three to five year period.

Obviously, to file Chapter 13 bankruptcy you have to enough income, after paying your monthly expenses, to pay into a Chapter 13 plan.

How does it work? St. Petersburg Bankruptcy attorney Nancy Cavey reviews your income from all of your sources and then subtracts your monthly expenses from your net monthly income to arrive at what it is called in bankruptcy code net on disposable income. It is not exactly what you think it might be, but you do need to know that the bankruptcy code requires that 100% of your net monthly disposable income be paid into a Chapter 13 repayment plan.

The monies that are paid by you into the plan are used by the trustee to pay the administrative costs of the case, your attorneys fees, priority claims such as taxes and child support, secure claims such as mortgage arrearages and unsecured claims like credit cards and medical bills.

With a Chapter 13 plan you may be able to pay a fraction of the debt that you owe and get a discharge or forgiveness of the balance.

The Chapter 13 plan has to be approved by the court. You will make plan payments to the trustee who, in turn, will pay your creditors. During the life of the Chapter 13 plan, you will also be given an automatic stay that prevents your creditors from harassing you regarding the payment of your bills.

If you make your Chapter 13 plan payments and remain current on all your other monthly payments, you may be able to get a discharge at the end of the Chapter 13 plan.

Of course, you financial circumstances change, you and your bankruptcy attorney can file the appropriate papers with the court to protect your interest.

Filing Chapter 13 bankruptcy allows you to take a deep breath, assess your financial situation, and enter into a prepayment plan to restructure your debt over time.

What could be better? Give us a call at 1-877-35-8192 to setup a consultation.

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